Paving the path for purpose-led businesses

12 minute read  08.10.2024 Keith Rovers, Charlotte Wylie, Fergus McKenna

Navigating the certification journey for social enterprises and B Corporations


Key takeouts


  • Reputation - B Corp and SE certification validates an enterprise's commitment to social and environmental causes, enhancing credibility, trust and loyalty among customers, investors and stakeholders, differentiating certified for-purpose businesses from traditional businesses.
  • Access to Networks and Growth Opportunities - Certified SEs and B Corps gain access to expert advice, valuable networks and growth opportunities, facilitating increased collaborations and further impact in a competitive market.
  • Legal and Constitutional Requirements - Certification requires SEs and B Corps to meet specific legal and constitutional criteria, ensuring their integrity, sustainability, transparency and ongoing compliance.

With the global drive towards Net Zero and the UN Sustainable Development Goals, stakeholder expectations are shifting – businesses are expected to be both profitable and produce positive outcomes for people and the environment. In this context, organisations are increasingly recognising the benefits of embracing more sustainable and inclusive business models.

A growing number of businesses are pursuing purpose-related certifications, such as social enterprise (SE) verification or certification and B Corporation (B Corp) certification, to validate their commitment to creating social and environmental value. At MinterEllison, the Social Impact Team is well equipped to guide businesses through this process as they seek to align purpose with profit.

What is a social enterprise?

SEs are purpose-driven businesses that are designed to address social, cultural, or environmental issues through trade.

There is no legal definition of a SE in Australia, however Social Traders defines a SE as a for-purpose business that meets the following criteria:

  • Purpose: The enterprise must have a clearly defined primary social, cultural or environmental purpose.
  • Income: The majority of the enterprise's income must come from trade, not donations or grants. This helps to ensure that the business model is sustainable and self-reliant.
  • Investment: The enterprise must invest efforts and resources directly into its mission, ensuring that the public or community benefit outweighs private gains. In a for-profit entity, this means that the public value created in any relevant distribution period must exceed the private benefit (dividends) distributed to shareholders. Not-for-profit (NFP) entities utilise all surplus for their mission and so structurally meet reinvestment requirements, with the main question being whether the NFP meets the trading requirements (see above).

Common social enterprise models

SEs generally create value through three different models, which are often used in combination within an enterprise:

  1. Donation: Businesses that donate a percentage of profits to another organisation creating social or environmental benefits (such as Who Gives A Crap, Thankyou, Goodwill Wines, and Humanitix);
  2. Direct Benefit: Businesses that deliver services in response to social or economic needs in the community or embed direct impact in their business model (such as work integrated social enterprises, including White Box Enterprises, STREAT, Good Cycles, and The Bread and Butter Project, which create employment opportunities for vulnerable cohorts facing barriers to employment in the open labour market); and
  3. Cross-Subsidy: Businesses that use a portion of their profits to provide access or support to underserved populations that would otherwise be unable to access their goods or services at market prices.

While B Corp certification (explored below) is only available to for-profit businesses, both NFP and for-profit (or 'profit for purpose') entities can seek SE certification or verification. The majority of SEs in Australia are NFPs.

Growth of social enterprises

In Australia, the SE sector is rapidly growing, with over 12,000 SEs now contributing more than $21.3 billion per year to the economy (over 1% of the GDP). See The Business for Good Report, commissioned by Social Enterprise Australia, for more statistics on the economic contribution of SEs in Australia.

The government is increasingly seeking to partner with SEs to progress labour market objectives. This was highlighted in Treasury's 2023 Employment White Paper, in which SEs were recognised throughout the White Paper as central to increasing security of work and developing a fairer and more inclusive economy. It was again reflected in the recent 2024-25 Federal Budget, which included $54 million in funding over five years for employment pathways initiatives, including collaborating with work integration social enterprises (WISEs). See our Federal Budget analysis for more on the social impact and ESG initiatives included in the 2024-25 Budget, and our analysis of the Employment White Paper for more on the implications of the White Paper for SEs.

A team at the University of Melbourne led by Melbourne Social Equity Institute Director, Professor Jo Barraket, are also currently investigating how SEs can improve employment outcomes for individuals experiencing disadvantage and how they can scale their impact to help transition participants into mainstream jobs, with the goal of fostering more inclusive and effective employment services in Australia.

Benefits of certification or verification for social enterprises

Certification and verification can be a powerful tool, providing credibility and recognising a for-purpose business' commitment to creating social or environmental value. Social Traders is one organisation in Australia certifying SEs, which operates a national SE certification program that independently certifies enterprises and provides a gateway to a range of business to business opportunities, including those facilitated under government and corporate social procurement policies. It maintains a register of such organisations and collates data in relation to social procurement markets.

In addition to certification pathways, there are also verification systems enabling an enterprise to be verified as a SE. For example, the Social Enterprise World Forum operates a points-based verification system (The People and Planet First verification framework). The People and Planet First framework provides a global verification system, access to resources and collective advocacy, with the aim of building a global movement for an economy that puts people and planet first. Verification is available for enterprises that put people and planet first and satisfy the points-based verification system, which may include SEs in addition to cooperatives, mutualist organisations, not-for-profits and more – with the focus being on shared core standards, not terminology or legal form.

Organisations may seek both verification and certification, or only one, depending on their objectives and business model (including if they intend to access opportunities under social procurement policies – noting certification is generally required to access social procurement contracts). Advantages of certification and verification may include:

  • Enhanced Credibility and Trust: Certification and verification provide external validation that an enterprise is genuinely committed to social or environmental causes, helping to differentiate it from traditional businesses. This assurance can enhance the trust and brand loyalty of customers, investors and other stakeholders amidst increasing scrutiny about the integrity of business claims.
  • Clarifying Purpose and Impact: The certification and verification process helps enterprises articulate their social impact model, making it easier to explain and quantify their purpose and measured impact. This can be particularly beneficial for securing funding, opportunities and support, and can enhance internal alignment to effectively communicate the enterprise's mission.
  • Access to Networks and Growth Opportunities: Certified and verified SEs may gain access to expert advice, build connections and join a supportive community of like-minded businesses. This networking can lead to collaborations that drive further growth and impact.
  • Enhanced Procurement Opportunities: Certified SEs are more attractive to government agencies and corporates seeking to engage in ethical procurement. Certification can also open up opportunities to contract with government and corporates under their social procurement policies (as mentioned above, social procurement policies generally require an enterprise to be certified to fit within social procurement policies). For example, 3% of the total contract spend on the Level Crossing Removal Project in Victoria is allocated to social enterprises, Indigenous businesses, and employment of disadvantaged job seekers.
  • Increased Market Visibility: Certification and verification may help SEs stand out in a crowded market, serving as a powerful marketing tool and attracting mission-aligned customers and investors.

Social enterprise certification and verification requirements

An application for Social Traders SE certification can be submitted through the Social Traders portal, accompanied by relevant supporting documents to demonstrate alignment with the definition of a SE adopted by Social Traders (see above), including the governing document, financial data, business plan and impact data. To achieve Social Traders certification an enterprise must embed its defined purpose in its governing document and operationalise the purpose through the organisation's activities. Unless the organisation is a NFP, there must be constitutional provisions restricting the distribution of profits, to ensure any private benefit does not outweigh public benefit. Following an application being submitted, a discussion is then scheduled with Social Traders regarding the business and impact model. Any additional requested information must then be provided, followed by notification of the outcome. Enterprises must undergo a recertification process to demonstrate ongoing compliance, generally every three years (depending on the length of operations).

The People and Planet First verification process assesses enterprises based on a five-point scale across five criteria:

  1. Purpose: Exists to solve a social and/or environmental problem
  2. Operations: Prioritises purpose, people and planet over profit in operational decisions
  3. Revenue: Has a self-sustaining revenue model
  4. Use of surplus: Reinvests the majority of any surplus towards its purpose
  5. Structure: Chooses legal structures and financing that protect and lock-in purpose long-term.

Enterprises can apply online for verification, which involves selecting points for each of the five standards, and uploading supporting documents (which may include financial documents or the enterprise's governing document). Enterprises require at least one point in each category to be eligible for verification, and points are not shared publicly. Verification must be renewed annually to ensure ongoing compliance.

What is a B Corp?

A B Corp is a for-profit company that has been assessed by the certifying body, B Lab, as meeting high standards of social and environmental performance, accountability and transparency. B Lab is a global NFP organisation that evaluates companies based on their overall impact on workers, customers, community and the environment. Like SEs, B Corps are part of a global movement of people using business as a force for good and aspiring to use the power of markets to solve social and environmental problems.

Benefits of B Corp certification

There can be a range of benefits associated with B Corp certification. Certification enhances an entity's reputation and attracts people who are seeking meaningful work. It also opens doors to a community of like-minded businesses and consumers who prioritise purpose alongside profit. B Corp certification can also be a differentiator in a crowded market, appealing to a growing demographic of conscious consumers. Advantages of certification may include:

  • Enhanced Reputation: B Corp certification signals to consumers, investors and other stakeholders that an entity is dedicated to sustainable and ethical business practices, enhancing its reputation and credibility.
  • Access to a Global Network: B Corps become part of a global community of businesses committed to using capital as a force for good, providing opportunities for shared learning and collective impact.
  • Improved Performance: The rigorous B-Impact Assessment process encourages entities to identify areas for improvement, leading to better overall business practices.
  • Attracting Talent and Investment: Certification helps attract employees who are motivated by purpose-driven work and impact investors that are interested in sustainable and ethical investments.

There are over 650 B Corps across Australia and New Zealand, accounting for a significant percentage of the 7,800 B Corps worldwide. Australian B Corps include Australian Ethical, MoneyMe, Adara Partners, Biome and Kathmandu Brands. Internationally, a number of large companies are certified B Corps including The Body Shop, Ben & Jerry's, Patagonia and Unilever ANZ, which demonstrate the possibility of combining profit and scale with purpose.

Certification and constitutional requirements for B Corps

The B Corp certification process involves a comprehensive assessment of a company's impact on various stakeholders. Requirements include:

  • B Impact Assessment (BIA): Entities must complete the BIA, scoring a minimum of 80 out of 200 points across categories like governance, workers, community, environment and customers.
  • Legal Requirements: Entities must amend their governing document to require directors to consider stakeholder interests when making decisions, aligning with long-term social and environmental goals rather than short-term profit maximisation.
  • Transparency: Certified B Corps must make their B Impact Report available to the public by publishing it on the B Lab website.
  • Ongoing Compliance: Entities must apply for re-certification every three years or when there has been a change in ownership. This helps to ensure continuous compliance and improvement, and builds certainty amongst stakeholders regarding the impact credentials of B Corps.

In Australia and New Zealand, B Lab has prescribed clauses that must be in the constitution of every B Corp to ensure the entity is mission-locked and held to a higher standard of accountability. The clauses include:

  • The purpose statement: requiring profits to accompany positive impacts on society and the environment; and
  • The stakeholder clause: requiring governance decisions to be made through a long-term lens that considers a broader range of stakeholders, such as the entity's employees, the community and environment as well as shareholders.

How MinterEllison can assist

The Social Impact Practice at MinterEllison possesses extensive experience in guiding SEs and B Corps from inception to certification. Our services include:

  • Structuring Advice: We provide tailored advice on the most appropriate legal structure for various for-purpose enterprises, assisting an organisation to implement the right framework at the outset to scale, operate sustainably and achieve the desired impact.
  • Setting up SEs and B Corps: Our team assists with the entire set-up process, navigating through the intricacies of legal and regulatory frameworks to establish enterprises on solid foundations. We help draft and review constitutions and other governing documents to ensure they encapsulate environmental, social, and governance goals.
  • Assisting Organisations to Get ‘Certification Ready’: Achieving certification can be a complex journey. Our team can help ensure that enterprises meet the necessary standards. We can help prepare the requisite constitutional provisions to align with specific certification or verification criteria for SEs and B Corps.
  • Ongoing Support and Advice: We can assist with ongoing compliance to maintain certification or verification standards and adapt to evolving regulations and legal needs. We have extensive experience in the NFP and social impact sector, assisting with the full spectrum of legal advice, from structuring advice, start-up entity formation and charity registration (where applicable), through to governance, compliance, financing, contracting, risk management and restructuring support.

Our experience spans across various sectors, and we have proudly supported numerous for-purpose organisations to amplify their social impact, such as White Box Enterprises, The Bread and Butter Project, PlateitForward, Two Good Co and many others. From innovative startups to established charities and for-purpose businesses, our team offers a wealth of knowledge in supporting sustainable business models. We also work with larger corporates to integrate social enterprises and B Corps into their supply chains and support their ESG objectives.


Please reach out if you have any questions regarding SE or B Corp certification, structuring, governance, or the legal needs of sustainable businesses.

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